Share Capital and Debentures

Preference Share Capital Maintain record in Register of member Where a company issues equity shares with differential rights, the Register of Members maintained u/s 88 shall contain all the relevant particulars of the shares so issued along with details of the shareholders.

That part of the issued share capital of the company which carries or would carry a preferential right with respect to: (a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income-tax; and (b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company; Point to Remember Capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely- (a) that in respect of dividends, in addition to the preferential rights to the amount specified in sub clause (a) of Clause (ii), it has right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid. (b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid.

Important Question Q. No. 1: Can equity share with Differential Voting rights be issued? If yes, state the Conditions under which such shares may be issued? [May 18 (6 Marks)] HINT: Refer sec 43 and Rule 4 of Companies (share capital and Debenture) Rules, 2014.

4.4 – Certificates of Shares (Sec. 46) Meaning of Share Certificate A share certificate is a document of title issued by the company declaring that the person named therein is the owner of a specified number of shares in the capital of the company. It is not a negotiable instrument because it is not transferable.

Evidential Aspect – Sec. 46(1)

Issue of Duplicate Share Certificate – Sec. 46(2) Share Certificate, issued under the common seal if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary, specifying the shares held by any person, shall be prima facie evidence of the title of the person to such shares.

A duplicate certificate of shares may be issued, if such certificate: (a) is proved to have been lost or destroyed; or (b) has been defaced, mutilated or torn and is surrendered to the company.